China’s economy is likely to grow at a pace between 6 and 7 percent annually in the next 10 years, bolstered by urbanization, private consumption and new technology, Fred Hu Zuliu, chairman of China-based investment firm Primavera Capital Group, said.
Speaking to the Hong Kong Economic Journal in an interview, Hu also said the country has room for further cuts in interest rates and banks’ reserve requirement ratio.
Hu, a former International Monetary Fund official and ex-chairman of Greater China at Goldman Sachs, said the current 7.5 percent growth target for the economy is too high.
“There would be more flexibility if the target is set at 7 percent, and thus the government wouldn’t be that passive,” Hu said, noting that the country’s leaders are struggling to achieve the official goal.
Before the year ended, the People’s Bank of China adjusted the rules for calculating bank deposits, an alternative move to lower the lenders’ reserve requirements.
“The adjustment is only a minimal change, not really a big push,” Hu said. “Yet it sent a signal that there is still plenty of room with regard to monetary policy control.”
Hu said the reserve requirement ratio, which stands at 20 percent for large banks, will be lowered to a level slightly above 10 percent in phases over the next three to five years.
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